Three ways for an economy to grow

[AllentownJake]

1) Grow something and harvest it

2) Mine raw materials and sell it

3) Take raw materials or something grown and add value to it through manufacturing.

Can't change that.

Education supports those activities because it makes them more efficient and can produce people who have knowledge to design new products for manufacturing. Things that increase trade, are good as well, as long as you are on the plus side of the trade equation. The service economy, exists to service these activities. Your service sector can't grow larger than the benefit of you economic output.

For instance, for years it has been discussed around my region of investment in a train from New York City to my region. I love the idea as a longtime resident of this region, because it will bring in money to my region and take money from New York and New Jersey.

New York will get some benefit from people from my region spending discretionary money on entertainment in New York, however, the benefit for my region will far exceed New York's as people move into my region and spend the majority of their money on grocery stores, bars, dinging, auto mechanics, housing, etc in my region and that is how you have to view trade agreements which is essentially what a regional rail system to New York would be.

[el_bryanto]

1. Not necessarily

I agree that is likely in your case, but no matter how free and porous the borders get between us and Latin Americans - most Americans aren't going to move down there. Rather the wealth of those areas will be transferred here with less wealth going down there.

Bryant

[AllentownJake]

2. If Latin American leaders are smart

They take our money and spend it on infrastructure on their own.

[Jeff In Milwaukee]

3. Oh Dear God In Heaven. More of this Nonsense?

The service sector can't grow larger than manufacturing?

Pssst! It already is -- 67.8% of the US GDP is Services.

[AllentownJake]

4. That is part of the problem we are in

:rofl:

You know the trade deficit/government spending deficit/Consumer debt issue.

[Jeff In Milwaukee]

5. Would you PLEASE read a book?

Seriously. I'll buy it for you. Any basic economics textbook will do. I'm not even going to bother attempting to explain the ignorance you're displaying in this latest little screed. It doesn't appear to have any effect on you and, frankly, you're just becoming more and more tedious.

[AllentownJake]

7. Yes we can borrow our way to prosperity

and masturbate our way to growth.

China manufactures a product, sells it to us, than lends us money based on the sale at interest, while sending their children to our universities to learn our knowledge and bring it back to China and building their infrastructure.

Meanwhile, our government, mortgages our children's future pacifying a population as the pot boils for their children.

I think the results of the past 30 years of your economic theory, speaks for itself. My community was a hell of a lot more prosperous when there was a steel mill and other manufacturing running.

[TexasObserver]

20. He knows economics and finance.

Our trade deficit is killing us, and no amount of Americans providing services to other Americans will abate that deficit. It's a massive capital drain on the country.

[TwixVoy]

38. No you're wrong Texas

There is absolutely NOTHING wrong with having a populace completely indebted to the banks. There is nothing wrong with having 50-100K in student loans, 30K in credit card debt, a 30K car loan, and earning peanuts.

There is nothing wrong with manufacturing NOTHING (when compared to other nations like China), and buying those goods using money we borrowed from them.

Can't you see that if we have an economy based on doing all that while we all work at Wal-mart selling those Chinese made goods to each other it will go on forever?

[TexasObserver]

45. If you're being sarcastic, and I think you are, yeah.

What we have is a glorified version of the company town, and China gives us their company script, which we can then use to buy their junk at the company store.

Shades of the Depression.

[jpak]

43. Most of our trade deficit is due to imported oil and US oil production is in an irreversible decline

the only way to fix that is to reduce oil consumption.

[TwixVoy]

36. It's scary isn't it?

How some people just don't get it?

According to many DUers it's totally OK for everyone to be in massive debt, to produce nothing, and to borrow from foreign nations to finance our debt consumption. They just don't get it.

They are going to be the ones most surprised when we are a nation of poor people.

[AllentownJake]

39. That or they are in the service industry

and they blindly believe the nonsense politicians are telling them because they think it will benefit them.

[TexasObserver]

6. Recommend

[AllentownJake]

10. Can you give me some back-up here

The Reaganist appear to think I'm uneducated.

[TexasObserver]

17. You laid it out clearly in the OP. You're absolutely right.

Most jobs come from the private sector. They have to. Most of them are provided by small businesses, but we need big businesses to compete internationally. We have to produce. We have to create more than we consume. We have to manufacture. We cannot be a nation of consumers, all providing services to each other, and few producing anything to export.

I haven't read anyone else's comments in this thread, so I'm speaking generally, and not in response to anyone else in this thread. I may or may not read any others here.

You are one of the best informed economic and financial analysts at DU, and your many OPs on the topics prove it.

[AllentownJake]

18. I'm quoting Lee Iacocco here

Shh...He's my fraternity brother and fellow Allentownian.

[berni_mccoy]

8. You've left out a huge part of the economy: services. And yes, other countries do buy our services

These include medical, technological, business, consulting, etc.

As my business is a service industry, I can tell you I've earned money from European countries.

[AllentownJake]

9. You can export services

Those countries are paying for it, with things they did in the first 3. The foundation will always be production and not everyone in this country is equipped to "service" things.

We have a large trade deficit and large outflows of capital that return to us in the form of loans that we pay interest on. That needs to be addressed.

[berni_mccoy]

11. LOL!

Or they could have provided services in exchange. Dude, give up, you are just wrong here.

[AllentownJake]

14. I think the results of the past 30 years

The national debt, consumer debt, trade deficit, implosion of the world financial markets, etc speak for itself. Keep drinking the kool-aide.

[berni_mccoy]

15. If facts are kool-aide, then I'll take a mighty drink. You lose an argument on facts...

and resort to name-calling and labels. You are a very sad person.

[AllentownJake]

16. You gave a micro-economic anecdote lol

Based on your personal economic situation. Reaganism has been good for you. Keep supporting neo-liberalism.

:rofl:

[berni_mccoy]

19. I really don't see why you have to go straight for name calling and labels

And pointing out that services are a large part of the economy is not "Reaganism" or neo-liberalism. It's a fact.

[AllentownJake]

22. Why are they a large part of the economy?

Who started that, and embracing that type of economy, is in fact Reaganism and neo-liberalism.

[berni_mccoy]

26. Roughly 75% of the GDP is attributed to Services. It's been that way for more than a decade.

That is a fact. It has nothing to do with Reaganism.

[AllentownJake]

28. and the world fell a apart

:rofl:

You are making my arguments for me.

[berni_mccoy]

29. Ignore the data then and keep name-calling. But if you are interested in the facts

Look at historical data. Services have always accounted for more than 2/3rds of the GDP, even when the economy was strong.

[AllentownJake]

31. Sigh

Over the past 30 years Americans went from being savers to debtors, having a trade surplus to trade deficits, running a low deficit to a substantial one, average incomes have stagnated or declined when adjusted for inflation, and you are focusing on one small data point to make your point and your data point is incorrect.

[berni_mccoy]

33. Sigh back at you. You claimed there were only three ways to grow the economy.

And you were proven wrong.

The trade deficits are primarily a result of bad trade policy. Services have been outsourced just like manufacturing. Ever hear of India?

[AllentownJake]

34. You have to service something

Does a service clothe you, feed you, or house you? Who are you consulting with other consultants on how to do better consulting? Service sector growth has to lag behind the first 3, not lead it.

:rofl:

Ok we should be done.

[berni_mccoy]

37. Wow, you have a deficit...

mentally.

All three of those areas you mentioned: clothing, food and housing, all are supported by services.

Who provides laundering services? Who tailors clothing? Who cooks or serves food in a restaurant or provides shipping of produce? Who paints houses, lays plumbing or wires a house for electricity? All of these provided by services.

Yep. we're done all right.

[AllentownJake]

40. Again

making my points for me. :evilgrin:

[berni_mccoy]

41. Again

You're wrong.

[AllentownJake]

42. The sad thing is every example you give proves me right

:rofl:

[TexasObserver]

24. The Kool-aid you're drinking is GOP propaganda.

THEY are the ones who don't give a damn about keeping good manufacturing jobs in the US. THEY are the ones who crow, as you do, that the services sector is sufficient.

I know their objectives. They like having cheap labor and cheap products, and they don't give a damn about jobs for the working man and woman. I do, and so do most Democrats. Your inability to see how important this is to Democrats and Americans reveals your ignorance. You don't know the first thing about our trade deficit, or the impact it is having on our economy. And you certainly don't understand how to address the problem. "You want fries with that" isn't going to get us out of this mess.

[TexasObserver]

23. I suggest you look at the US trade deficit by year.

Whatever we're exporting in the way of services, it's small compared to manufacturing and its potential. And even in services, we're having a net loss, as evidenced by all the service jobs that have gone to India.

Services are great, but they won't solve our trade deficit or even come close to doing so.

[Odin2005]

12. That simplification only works if you consider knowledge and creativity a "raw material"

And writing computer code "manufacturing"

[AllentownJake]

13. Of course that is manufacturing

Building a wind turbine or solar power collector is mining.

[Odin2005]

21. Ah, gotcha!

:hi:

[doc03]

25. All three are pretty much impossible in America

today. Big agribusiness has made it impossible for a family farm to survive.
According to some you can't mine anything or use anything you mine in this country it makes CO2. You can't manufacture anything, Americans won't work for 50 cents an hour and manufacturing facilities make CO2 and pollution.

[AllentownJake]

27. Regulation and tariffs

You don't trade on an equal playing field with a partner that doesn't share your values. You make them pay financially for not sharing them and you regulate your own industry.

Common sense is something this country surely lacks.

[doc03]

30. Try doing that, if anyone even mentions any such thing

Republicans and many Democrats start screaming protectionism.

[AllentownJake]

32. Protecting your own industry and agriculture is a good thing

I don't remember us embracing giving our knowledge to Soviets from 1950-1991. In fact, you'd get put in jail for doing so.

[StarfarerBill]

35. K&R

[AllentownJake]

44. Just to point out the words Barack and Obama are nowhere mentioned in this OP

Yet certain people are taking it on an attack on the administration. You'd think they would want to sell me on the things his administration is doing for the 3 things...they have a few examples.

[Javaman]

46. Well, you forgot the republican corrilary...

Create personal wealth by spending other peoples money.

[AllentownJake]

47. In light of the ADP report

Kick